Bankrupt Banker: UBS

UBS, Switzerland's largest bank, agreed Wednesday to pay $160.2 million US to settle charges it rigged bids on at least 100 U.S. municipal-bond transactions that generated "millions of dollars in ill-gotten gains."

UBS, Switzerland's largest bank, agreed Wednesday to pay $160.2 million US to settle charges it rigged bids on at least 100 U.S. municipal-bond transactions that generated "millions of dollars in ill-gotten gains." UBS will pay $47.2 million to settle Securities and Exchange Commission charges and $113 million to end cases brought by other federal and state authorities, the SEC said. Some of the money will be returned to municipalities, the SEC said. The settlement agreements, which involved 25 states, are part of criminal and civil investigations into a conspiracy by financial firms and municipal advisers to overcharge state and local governments for investment products. UBS's activity threatened the tax-exempt status of $16.5 billion of municipal bonds, the SEC said. "Our complaint against UBS reads like a 'how-to' primer for bid-rigging and securities fraud," Elaine Greenberg, chief of the SEC's Municipal Securities and Public Pensions Unit, said in a statement. "They used secret arrangements and multiple roles to win business and defraud municipalities through the repeated use of illegal courtesy bids, last looks for favored bidders, and money to bidding agents disguised as swap payments." The bank is the second to settle charges in the government's more-than-four-year antitrust investigation into bid rigging for investments states and cities make with proceeds from the $400 billion of bonds they sell yearly. Last year, Bank of America agreed to pay $137 million in restitution. Localities routinely hire advisers to invest bond proceeds at the highest returns offered by banks and insurers until the money is needed for public works. The U.S. Justice Department alleges financial companies paid kickbacks to advisers to run sham auctions so they could win the public money to invest at below-market rates. Prosecutors say bankers covered their activity by submitting phony bids in auctions won by their rivals and using separate derivative contracts to funnel payments to advisers. The SEC's complaint said UBS illicitly won bids as a provider of municipal-bond investment contracts and also rigged bids for the benefit of other banks. In some cases, UBS gave favored banks information on competing bids when it acted as a broker, the SEC alleged, while in other cases it won bids after receiving inside information. "UBS is pleased to have resolved this matter with its regulators," the Zurich-based company said in a statement. "The underlying transactions were entered into in a business that no longer exists at UBS and involved employees who are no longer with the firm." UBS said the settlement costs were accounted for in previous quarters and won't affect future results. Since October 2009, nine advisers to local governments and bankers working for financial firms including UBS, Bank of America and JPMorgan Chase, pleaded guilty in the case. Nine others have pleaded not guilty and are fighting charges in court. Last year, former UBS banker Mark Zaino pleaded guilty to fixing prices when brokering municipal-investment deals by submitting intentionally losing bids at auctions run by Los Angeles-broker CDR Financial Products. UBS allegedly entered into separate trades with another bank that were used to funnel kickbacks to CDR. Zaino agreed to cooperate in the investigation.<a href="http://www.vancouversun.com/Swiss+bank+pays+million+settle+municipal+bond+scandal/4735252/story.html"> The Justice Department also indicted the former co-head of UBS's municipal derivatives group and two colleagues. The government has identified more than a dozen firms, including JPMorgan Chase, units of General Electric, and Societe Generale of France, as unindicted co-conspirators in the case against CDR, according to court records. While competitive bidding is meant to ensure local governments get market rates on their investments, prosecutors say bankers and brokers carved up the market among themselves. The U.S. says that inflated their earnings at the expense of taxpayers and the Treasury, which is entitled to some investment earnings from tax-exempt bond proceeds.</a>

UBS, Switzerland's largest bank, agreed Wednesday to pay $160.2 million US to settle charges it rigged bids on at least 100 U.S. municipal-bond transactions that generated "millions of dollars in ill-gotten gains."

UBS, Switzerland's largest bank, agreed Wednesday to pay $160.2 million US to settle charges it rigged bids on at least 100 U.S. municip...

California real estate developer Igor M. Olenicoff filed suit Tuesday against UBS, claiming the Swiss banking giant deceived him

California real estate developer Igor M. Olenicoff filed suit Tuesday against UBS, claiming the Swiss banking giant deceived him about the legality of keeping $200 million in unreported offshore accounts; charged him millions in excessive fees; and after leading him astray, reported him as a "tax evader" to the Internal Revenue Service.In December, Olenicoff, a Forbes 400 member, pleaded guilty to a single federal tax felony and paid $52 million in back taxes, interest and civil fraud penalties. In his plea deal, he acknowledged that he had lied on his tax returns for 1998 through 2004 when he answered "no" to a question asking if he had ownership or authority over a financial account in a foreign country.In June, former UBS (nyse: UBS - news - people ) private banker Bradley Birkenfeld pleaded guilty to conspiring to helping the billionaire hide $200 million and evade $7 million in tax; he is cooperating with U.S. prosecutors and has made statements suggesting widespread wrongdoing at UBS.In a statement, Olenicoff described the suit, which accuses Birkenfeld, eight other former or current UBS bankers, and numerous additional defendants of fraud, as "the start of UBS and its partners in crime being called to account for what they did and answering to the victims of their shocking misconduct.” He is seeking $500 million in damages for actual losses and a "tarnished family and business name." A spokesman for UBS said Wednesday that the bank has reviewed the suit and "intends to vigorously defend itself in this litigation.'' UBS has admitted to compliance problems but has denied any wholesale fraud by the institution. It is now negotiating with the U.S. Department of Justice over a summons requiring it to turn over the names of the American owners of 19,000 "undeclared" UBS Swiss accounts. Swiss authorities insist such wholesale disclosure would violate the country's strict bank secrecy laws, which permit the turnover of information in cases of tax fraud, but not tax evasion. William J. King, the Orange County attorney who brought the suit for Olenicoff, said it shows UBS “carried out an enormous fraud that ensnared thousands of innocent investors.” But Edward M. Robbins Jr., the billionaire's criminal attorney, insisted Olenicoff still accepts responsibility for his own misconduct. “He is not trying to weasel out of his guilty plea by blaming it on UBS,” Robbins saidOlenicoff says in his suit that he began moving both offshore and onshore funds to UBS in 2001 after being courted with promises of legal tax savings. Instead, he alleges, UBS provided "erroneous legal and tax advice" and concealed from him that he "owed taxes on his investments" to the IRS and "would face criminal investigation for the management structure of his account,” which included various trusts and companies set up in Liechtenstein and Denmark. According to the suit, when Birkenfeld was approached by the U.S. Department of Justice in 2004, he disclosed information about Olenicoff and other U.S. clients. In 2005, the suit adds, UBS, knowing Birkenfeld had already turned over information about the billionaire, also "reported Olenicoff to the IRS as a tax evader.”"Everybody was trying to avoid blame and they were making Mr. Olenicoff the sacrificial lamb,” King says. Adding insult to injury, the suit alleges Olenicoff's funds have been mishandled and tens of millions has gone missing. Birkenfeld left UBS and in 2005 persuaded Olenicoff to move his money to Neue Bank, also a defendant in the case. Last year, as part of his deal with prosecutors, Olenicoff agreed to bring all his funds back to the U.S. But shortly before the transfer was to take place, the suit alleges, $40 million was removed from his accounts.

California real estate developer Igor M. Olenicoff filed suit Tuesday against UBS, claiming the Swiss banking giant deceived him

California real estate developer Igor M. Olenicoff filed suit Tuesday against UBS, claiming the Swiss banking giant deceived him about the l...

UBS, is under hot water after it was revealed today that they allegedly helped hide up to $20 billion belonging to their richest American clients

UBS, is under hot water after it was revealed today that they allegedly helped hide up to $20 billion belonging to their richest American clients in European and off-shore banks to avoid paying taxes to the IRS.The news has many in Washington up in arms, and a senate committee has called a hearing for Thursday. They want to meet with UBS representatives, who allegedly "set up sham entities for the US clients in tax havens, such as Panama or the British Virgin Islands, and pose as the owners of the entities." One UBS banker has pled guilty to smuggling cash and diamonds to Europe so U.S. clients could avoid paying taxes.Phil Gramm has worked for UBS since leaving the U.S. Senate immediately after using his position as a Senator to remove six-decade-old consumer banking protections in place since the Great Depression. The 1999 Gramm law, called the Gramm-Leach-Bliley Act, is the main cause of the subprime mortgage meltdown that has crippled the U.S. economy. Gramm deregulated the banking industry, quit the Senate to leave for UBS, then lobbyied George W. Bush on behalf of UBS to remove remaining state laws that protect consumers from predatory lending. Scandals are nothing new to the Gramm family. Around the same time Gramm was lining his pockets by laying the groundwork to destroy our economy, his wife Wendy used her power as a government official to delay investigations into Enron wrongdoing. Wendy Gramm then quit to take a position on the Enron board of directors. Wendy Gramm later was sued for her part in insider trading and paid a $13 million fine with her own money.Phil Gramm is also the same person who last week said that America was not in a recession, that the problem is that "America is a nation of whiners". John McCain tried to distance himself from Gramm after a firestorm erupted over that comment, even going so far as to claim Gramm would take a smaller role in his campaign.If the mainstream press connect the dots and put UBS and Phil Gramm together it could and should mark the end of any major influence Gramm has on the McCain campaign. Some people from UBS, and some U.S. tax dodgers will likely go to prison as well.A scandal like this would historically be a crippling blow to a presidential campaign, but don't expect much negative coverage tying McCain to Gramm and UBS. The war profiteering defense contractors who own the media today refuse to eat their own

UBS, is under hot water after it was revealed today that they allegedly helped hide up to $20 billion belonging to their richest American clients

UBS, is under hot water after it was revealed today that they allegedly helped hide up to $20 billion belonging to their richest American cl...